American Securities Capital Partners LLC, a New York City private investment company, bought Elmwood-based vacuum cleaner manufacturer Oreck Corp.
American Securities bought the 39-year-old company April 11 from an unnamed investment firm for an undisclosed amount. Details of the purchase were not released.
Oreck Chief Executive Officer Tom Oreck said the sale gives family members more control over its vacuum business. Tom Oreck is the son of company founder David Oreck.
“We went from one very strong financial partner to another strong financial partner,” Tom Oreck said. “The family (members) are still significant stockholders.”
Oreck family members have not been majority shareholders in the company for more than 10 years, said Tom Oreck.
American Securities regularly buys a majority stake in profitable companies with annual sales of at least $50 million and no more than $500 million, according to the company’s Web site. Oreck sales topped $319.6 million in 2000, according to New Orleans CityBusiness’ Book of Lists.
Representatives from American Securities did not return calls for comment.
The sale will not change the company’s growth strategy or product selection, Oreck said. He said Oreck’s headquarters will stay in the New Orleans, where it now employs about 100 people, down from 250 in 2000. In 2001, the company relocated more than 100 telemarketing jobs to its manufacturing plant in Long Beach, Miss.
Oreck employs about 1,000 people overall.
According to American Securities’ Web site, Oreck’s new financial partner owns several companies in the United States and Canada, including Mexican restaurant chain El Pollo Loco Inc. in Irvine, Calif.
El Pollo Loco reported about $150 million in annual revenue when American Securities bought it in 1999. Last year, El Pollo Loco sales reached $364 million from more than 300 restaurants in Texas, California, Nevada and Arizona.
Most companies in American Securities’ portfolio generated at least $100 million in annual revenue when the company first bought them.
Representatives from MetroVision, the economic development arm of the New Orleans Regional Chamber of Commerce, plan to visit American Securities’ New York offices later this year to discuss Oreck’s future in New Orleans.
Tommy Kurtz, vice president of economic development at MetroVision, said he’ll talk with the investors about possible business incentives for Oreck if the company retains or expands its New Orleans presence.
Kurtz said he hopes the introduction of a new financial partner will rekindle Oreck’s interest in the New Orleans business community. A privately held company, Oreck is known for being secretive about its operations.
Oreck recently applied for membership with Direct Selling Association, a nonprofit trade organization in Washington, D.C. Direct selling involves door-to-door demonstrations and party-sale techniques made famous by Tupperware and Mary Kay Cosmetics.
Amy Robinson, a spokeswoman with DSA, said companies using direct-selling techniques have hit their stride in America. Last year, direct-selling companies totaled $28.7 billion in sales, Robinson said, a 7% increase over $26.7 billion in 2001 sales. It marked the 18th year in a row the industry’s overall sales increased, according to the association.
Although Robinson is not familiar with Oreck’s business plan, she said the general market for direct-sales companies has become attractive for investors.
Well-established companies are starting their own direct selling ventures such as Southern Living magazine spinning off a party-sale decoration business called Southern Living At Home.
Oreck applied for membership with the organization in June. There is a one-year waiting period before the association’s board of directors decide whether to approve the application.